Steady Progress For Spinners

Jim Phillips, Contributing Editor

T he backlogs aren't where spinners would hope them to be, and the orders are generally
smaller, but since the near-disastrous conditions of the first quarter, many spinners have
recovered to enjoy a steady stream of business during the middle part of the year. In July,
spinners were reporting orders in-house averaging two to four weeks.

"We've been steady in our ring spinning business," said one North Carolina spinner. "A few
months ago, we had one plant struggling and one running a relatively full schedule. Today, one
plant is operating seven days and the other six days, so both are running very strong. But there's
not a lot of depth to that. We're running three to four weeks out and we're keeping the pipeline
full, but we don't see any longevity beyond that time period that people are willing to place
orders on. Ideally, we would like to have a six-to-eight-week order backlog and run a three-week
delivery schedule."

A two-to three-week turnaround seems to be the sweet spot for many of those spinners that
experienced a solid second quarter. "For our products, we've got to be able to turn them in a
two-to-three-week period," said one specialty spinner. "That's why we continue to get the business
we do. But it would be nice to have program orders in place for longer than that."

Another spinner added: "We're busy, but our pipeline is a lot shorter than we would
like. Our customers and retailers are limiting orders to just what they need for the
immediate future. We didn't see as big a jump as we had hoped for the back-to-school period, so we
are looking optimistically toward the end-of-the-year holidays. At this point, it all hinges how
confident retailers are that we are moving out of recession and into a recovery period."

Retailer confidence is directly tied to consumer confidence. Consumer confidence in the US
economy dipped slightly in June and July after several successive months of increase. Despite the
decreases, consumer confidence is still well above the all-time low recorded in February of this
year. Many economists attribute the June and July blips in consumer confidence to the worsening job
market. As well, these same economists predict the initial stages of any recovery will be weak
until the job market improves.

As surprisingly robust as ring spinning has been the past few months, however, open-end
business has been just as unsurprisingly weak, continuing a trend that began more than a year ago.
"It's been the same for a good while, now," said one spinner. Said another: "It's week-to-week
right now. There's just not much coming in."

PricingYarn pricing for customers has remained relatively stable for the first seven months of the
year, spinners report. "We're close to where we've been since the beginning of the year," said a
Carolinas spinner. "It's been pretty stable. We've had a few price increases in raw materials along
the way, some of which we've absorbed and some that we have tried to pass along. The latest
increase is in rayon, which seems to be heading northwards again. Cotton prices have been up and
down. We've been into a little more expensive cotton than we were earlier in the year, but I don't
see that being too dramatic right now."

As of the end of July, spot market cotton prices averaged 56.86 cents per pound, down from
64.25 for the same period a year ago. Landed mill prices averaged 58.08 cents, down from 64.25 for
the same period a year ago.

Looking AheadCompared to just a few months ago, most spinners interviewed were considerably more
optimistic about the prospect for favorable business conditions for the remainder of the year. "As
we head toward the year end, I think it will continue to get stronger," said one spinner. "The
worst I foresee is maintaining where we are. Of course, I am talking just about ring-spun. Open-end
is horrible, and it doesn't look to get better any time soon."

Said another: "The end result for this year will be decided by how strong holiday sales are.
If retail picks up and has a strong close, we have the opportunity to finish our year well ahead of
where we expected back in January or February. However, if retailers forecast slow holiday sales,
then the year will end up being very disappointing."